Case Name: N.R Dongre and ors. Vs. Whirlpool Corporation and ors.
Case Number: Civil Appeal No. 10703 of 1996
Court: Supreme Court of India
Bench: Justice JS Verma and Justice K Venkataswami
Author of Judgment: Justice JS Verma
Decided on: 30th August 1996
Relevant Acts/ section: section 27, 28 of Trademark Act 1958
Keywords: Passing off, well-known mark, Transborder reputation.
Case analysis by: Shubhankar Das
FACTS
The respondent i.e. (initially plaintiff no. 1) Whirlpool Corporation is a multinational company incorporated in USA. TVS Whirlpool (initially plaintiff no. 2) is a company incorporated in India in which plaintiff 1 is a majority shareholder and is licensed to use trademark and trade name Whirlpool by plaintiff no. 1. Defendant No. 1 & 2 is trustees of Chinar trust and defendant no. 3& 4 are trustees of Mansarovar Trust also trading as USHA-SHRIRAM, defendant no. 5 is a company incorporated under the Indian Companies Act.
Plaintiff no. 1 is the successor of the trademark ‘WHIRLPOOL’ since 1937 and by 1957 they had 2000 trademark registration all over the world across 65 countries through itself or its subsidiaries. In India, in 1956 it obtained the trademark for cloth dryers, dishwashers, washing machines, and other appliances. However, in 1977 due to failure to renew the registration the trademark in India lapsed. In 1987 plaintiff no.1 formed a joint venture with plaintiff no. 2 and machines were sold under the banner TVS (in collaboration with Whirlpool Corporation). Earlier the products bearing the mark ‘WHIRLPOOL’ were sold in the US embassy in India.
The defendant on 6th august 1986 had applied with the registrar for the registration of a trademark, on 16 October 1988 it was the first time advertised in trademark journal, and on 16 January 1989 the plaintiff opposed it. However, the assistant registrar of the trademark dismissed the claim on the grounds of non-use and no reputation of trademark whirlpool in India and there would not be any likelihood of any confusion arising if Mr. N.R. Dongre and his company are allowed to sell out products bearing whirlpool.
The plaintiff thereafter filed an appeal against this order before the Delhi high court; they filed for a petition under section 46 and section 56 of the Trademarks Act seeking cancellation of trademark registration of N.R Dongre and his company.
In July 1994, the plaintiff came across an advertisement of the defendant inviting dealers for ‘WHIRLPOOL’ under washing machines, now plaintiff bought a washing machine and found it to be of inferior quality in comparison to the plaintiff’s manufactured washing machine. So plaintiff initiated a proceeding against the defendant in the Delhi high court seeking a permanent injunction of using the mark ‘whirlpool’ by the defendant.
ISSUES
Even if the plaintiff has no sale in India can it be said that the plaintiff had acquired a Trans-border reputation and if yes, then whether based on that trans-border reputation can action by the plaintiff for passing off be maintainable or should there goodwill or reputation be confined to territories of their actual use?
Whether the plaintiffs who are not registered proprietors of the trademark ‘WHIRLPOOL’ in respect of washing machine can maintain an action for passing off against the defendant who is the registered proprietor of the same mark of goods?
JUDGEMENT
SINGLE BENCH
In the learned single judge, RC Lahoti of Delhi high court held both the issues in favor of the plaintiff (in this case respondent).
The first issue was in favor of the plaintiff on the basis that plaintiff no.1 has sales in India to US Embassy, and there have been documents presented about its prior use, registration globally.
The second issue, the judge referred to section 28 read with section 27(2) of The Trademarks Act 1958. In which irrespective of registration of trademark and factum of exclusive use as provided by section 28 to the registered proprietor, still the same rights subject to any other provision of the Act and section 27(2) provides that every right under Trademark Act is irrelevant in case of Passing off. Hence, registration of a trademark is irrelevant in an action of Passing off.
So temporary injunction was granted on the grounds established that:
There was prior registration of the mark ‘WHIRLPOOL’ by the plaintiff in India in 1956 and continued till 1977 which is before the earliest claim by the defendant in 1986.
There was no reliable evidence of the defendant having marketed their washing machine for any considerable length of time before the date of grant of an injunction.
Balance of convenience in favor of plaintiff as machines of the defendant was of inferior quality.
DIVISION BENCH
The division bench (M. Jagannadha Rao and A.D. Singh, JJ.) on appeal found that there is no reason to interfere with the discretion exercised by the learned single judge in granting the temporary injunction, hence the defendant’s appeal was dismissed. The division bench also said that there is no plausible and convincing explanation from the defendant side as to how they came to adopt the mark ‘WHIRLPOOL’.
SUPREME COURT
The Coram (J.S Verma and K. Venkataswami JJ) upheld the decision of the learned single judge and divisional bench. They dismissed the appeal of the defendant with a cost of Rs. 10000/-[1].
ANALYSIS
The court noted that Whirlpool Corporation was not only the prior user of the trademark but was also associated with it since the year 1937, whereas the appellants only applied for it in the year 1986. The concept and principle on which passing off action is grounded are that a man is not to sell his goods under the pretense that they are the goods of another man. The court further observed that since 1937, ‘WHIRLPOOL’ is registered in 65 countries with a huge business scale. It was also observed that even though whirlpool products were only sold to US Embassy and a few other Unites States offices in India but the brand name ‘WHIRLPOOL’ have been frequently advertised in international magazines having circulation in India and as a result, it was gaining popularity and well-known reputation not only in the US but in other parts of the world as well including India. Due to which it acquired a Trans-border reputation and goodwill. People and customers began to identify ‘WHIRLPOOL’ with washing machines and other electrical appliances and devices. Also, the buyers are likely to be deceived or confused about the source of the goods if the appellant is allowed to sell their goods under the same mark ‘WHIRLPOOL’ and due to which the respondent would suffer irreparable injury as the product by the appellant were of inferior quality than the product sold by the respondent.
BRIEF ESSENCE OF THE CASE
The concept of Trans-border reputation was first formulated in this case. Trans-border reputation was defined as being present when a product and its trade name transcends the physical boundaries of the geographical regions and acquire a trans-border or beyond the border or overseas or extraterritorial reputation not only through import or sales of goods but also by its advertisements. Also, the knowledge and awareness of goods of foreign trade and its trademark can be present in any place even where the goods are not being marketed and consequently the trademark is not being used. The court also said an important point that the appellate court can interfere with the exercise of discretion by a court of the first instance in grant interim injunctions only if such exercise is found arbitrary, capricious, perverse, or against the settled principles of law regulating grant or refusal of interlocutory injunctions. The Supreme Court Coram of division bench also clearly said that it will not re-assess the material or seek to conclude differently from that of the lower court if the decision of the lower court was reasonably possible on the material. However, in the lower court also the learned judge looking at the short counter by the defendants due to paucity of time allowed them to present material facts which they could not do earlier they shall have the liberty of moving an application under Order 39 Rule 4 CPC[2]. Supreme Court also said, “even the additional material produced by the appellant is not sufficient to swing the balance in the other direction.” It was also contended in the court by the respondent in Para 14 of the Judgement[3] that the defendant was earlier doing their business in the name of USHA-SHRIRAM, USHA-LEXUS and there is no explanation by them for this switch over which reveals their intent to derive unfair advantage of the established name of ‘WHIRLPOOL’ associated with the plaintiff no. 1 because of prior use, which is alone sufficient to support the passing off the action by defendants. The respondent counsel Soli Sorabjee also contended that the appeal court will not interfere with the exercise of discretion by the trial court in granting a temporary injunction and this is more so when the discretion exercised by the trial court has been affirmed in the first appeal which was recognized by the Supreme Court as well. The court also defined injunction by saying that injunction is a relief in equity and is based on equitable principles and upon the findings of the case, it is clear that the weight of equity was in favor of the plaintiff against the defendants. This case is an important judgment because of the ambiguity in the judicial interpretation related to well-known trademark across the border, this case states that the physical presence of the good or services related to the mark is not a necessary factor in determining whether the mark is well known or not, as only the knowledge of the mark in the minds of substantial public associating that mark with the proprietor is sufficient to term it as a well-known mark.
POST JUDGEMENT AMBIGUITY
In 2017, another division bench came up with a different opinion concerning the concept of Transborder reputation in the judgment of Toyota Jidosha Kabushiki Kaisha Vs. Prius Auto Industries Ltd. and Ors[4]. with an opposing view, that goodwill has to be established in the Indian market for acquiring a well-known status in India. Whether this case overruled the NR Dongre Vs Whirlpool corp. is still a pertinent question because both the judgment was given by a division bench and a same strength bench judgment cannot overrule the same strength bench previous judgment. Judiciary is yet to give an interpretation on this issue.
If we look at the Prius case[5], the bench presided by Justice Ranjan Gogoi and Justice Navin Sinha while discussing the concept of Transborder Reputation stated that goodwill acquired globally would not be sufficient to determine well-known status in India. The mark has to gain goodwill in India for a relevant period before the mark is adopted by the other party. This implies that the bench had an exactly opposite opinion against the N.R Dongre ruling concerning ‘Transborder Reputation’. Both the Judgements are pronounced by division benches (same strength bench) of the Supreme Court, there is a need to resolve this issue by the means of appointing a bench of higher strength to determine the correct interpretation and give a ruling.
References:
1. 1996 PTC (16) 583 (SC)
2. The Code of Civil Procedure, 1908, Order 39, Rule 4
3. Supra 1
4. AIR 2018 SC 167
5. Supra 4
About the author –
The case analysis is submitted by SHUBHANKAR DAS, 5th Year B.A.LL.B (Hons.) student at Institute of Law, NIRMA University.
